How Investors May Respond To Morgan Stanley (MS) After Lower Capital Buffer and E*Trade Crypto Expansion

• The Federal Reserve reduced Morgan Stanley’s stress capital buffer from 5.1% to 4.3% effective October 1, 2025, following a successful appeal from the bank; at the same time, Morgan Stanley announced that E*Trade will introduce direct trading of Bitcoin, Ethereum, and Solana through a partnership with Zerohash in the first half of 2026.
• These developments reflect regulatory adaptation and ongoing business transformation, with Morgan Stanley reinforcing its capital strength while moving to capture demand in the evolving cryptocurrency space.
• We'll examine how the reduced capital buffer could influence Morgan Stanley's investment case and outlook in light of these changes.

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Morgan Stanley Investment Narrative Recap

To be a Morgan Stanley shareholder right now, you need to believe in the firm’s ability to leverage its strong wealth management franchise, adapt to evolving regulation, and innovate through technology to capture new revenue streams. The reduced stress capital buffer signals regulatory flexibility and may increase Morgan Stanley’s capacity to invest and return capital, but does not fundamentally alter the near-term catalyst: sustained growth in fee-based client assets. The biggest short-term risk remains any abrupt regulatory change or disruption in client asset flows, and this news does not materially diminish that possibility.

Morgan Stanley’s recent move to enable direct cryptocurrency trading on E*TRADE is especially relevant, as it aligns directly with the growing client interest in digital assets and could support the next leg of client asset growth. By broadening digital product access, the firm is positioning itself to further strengthen recurring revenue sources while enhancing client engagement amid rising competition for tech-forward investors.

Yet, in contrast, investors should still be mindful of the outsized impact that regulatory actions can quickly have on capital deployment and earnings...

Read the full narrative on Morgan Stanley (it's free!)

Morgan Stanley's narrative projects $76.0 billion in revenue and $17.2 billion in earnings by 2028. This assumes a 5.0% annual revenue growth rate and a $3.1 billion increase in earnings from the current $14.1 billion.

Uncover how Morgan Stanley's forecasts yield a $145.90 fair value, a 6% downside to its current price.

Exploring Other Perspectives

Five fair value estimates from the Simply Wall St Community range from US$102.53 to US$145.90 a share. Differing opinions are common, especially as digital disruption and evolving regulations could shift Morgan Stanley’s earnings outlook, explore what other investors are seeing.

Explore 5 other fair value estimates on Morgan Stanley - why the stock might be worth 34% less than the current price!

Build Your Own Morgan Stanley Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Morgan Stanley research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Morgan Stanley research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Morgan Stanley's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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